Victoria Government Gazette
No. S 36 Tuesday 21 February 2017
By Authority of Victorian Government Printer
Electricity Industry Act 2000
ORDER SPECIFYING A METHODOLOGY AND FACTORS FOR THE
DETERMINATION OF THE AVOIDED SOCIAL COST OF CARBON
Order in Council
The Governor in Council makes the following Order:
1.Purpose
The purpose of this Order is to specify a methodology and factors for the determination of
the avoided social cost of carbon which the Essential Services Commission (ESC) must have
regard to under section 40FBB(3)(c) of the Electricity Industry Act 2000.
2.
Authorising provision
This Order is made under section 40FBB(3B) of the Electricity Industry Act 2000.
3.Commencement
This Order takes effect on the day it is published in the Victoria Government Gazette.
4.
Definitions
In this Order –
avoided, in relation to CO2e, has the meaning given by clause 5;
CO2e has the same meaning as carbon dioxide equivalent of a greenhouse gas (as defined
in section 3(3) of the Victorian Energy Efficiency Target Act 2007);
relevant financial year means the 2017/18 financial year, for which a rate or rates determined
under section 40FBB of the Electricity Industry Act 2000 will apply;
relevant period means the five-year period ending on 31 December of the calendar year that
ends 6 months prior to the commencement of the relevant financial year.
5.
Meaning of avoided (in relation to CO2e)
For the purposes of this Order, CO2e is avoided if demand for electricity generated by a
generation facility that is not a small renewable energy generation facility falls because of the
export of small renewable energy generation electricity.
6.
Methodology and factors for determining social cost of carbon
For the purposes of section 40FBB(3)(c)(i) of the Electricity Industry Act 2000, the avoided
social cost of carbon for the relevant financial year is the cost per kilowatt-hour of small
renewable energy generation electricity purchased by a relevant licensee, determined in
accordance with the following methodology and factors –
where –
Avoided social cost of carbon is the cost per kilowatt-hour of small renewable energy
generation electricity purchased by a relevant licensee, expressed in dollars;
Volume factor is the volume of CO2e that is avoided by each kilowatt-hour of small
renewable energy generation electricity purchased by a relevant licensee, expressed in tonnes
and calculated in accordance with the formula in clause 7; and
Price factor is the value of a tonne of CO2e for the relevant financial year, expressed in
dollars and calculated in accordance with the formula in clause 8.
SPECIAL
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7.
8.
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Formula for calculating Volume factor
For the purposes of clause 6, the Volume factor must be calculated in accordance with the
following formula –
where –
Volume factor is the volume of CO2e that is avoided by each kilowatt-hour of small renewable
energy generation electricity purchased by a relevant licensee, expressed in tonnes; and
X is 1 (representing 1 kilowatt-hour of electricity exported by a small renewable energy
generation facility); and
Coefficient factor is 1.27 (reflecting that 1.27 kilograms of CO2e are avoided by the export
of every kilowatt-hour of small renewable energy generation electricity).
Formula for calculating Price factor
(1) For the purposes of clause 6, the Price factor must be calculated in accordance with
the following formula –
(2)
where there are q months within the relevant period and –
Price factor is the value of a tonne of CO2e for the relevant financial year, expressed
in dollars; and
Pm is the VEET average market spot price of one tonne of CO2e for month m of the
relevant period.
For the purposes of subclause (1), the VEET average market spot price is, for a month
specified in column 1 of the following Table, the corresponding amount specified in
column 2 of the Table opposite that month.
Table
Column 1
Month
Jan 2012
Feb 2012
Mar 2012
Apr 2012
May 2012
Jun 2012
Jul 2012
Aug 2012
Sep 2012
Oct 2012
Nov 2012
Dec 2012
Column 2
VEET average market spot price
$ 33.51
$ 23.81
$ 22.09
$ 21.89
$ 23.71
$ 23.95
$ 21.32
$ 21.17
$ 22.55
$ 21.56
$ 20.00
$ 20.00
Victoria Government Gazette
Column 1
Month
Jan 2013
Feb 2013
Mar 2013
Apr 2013
May 2013
Jun 2013
Jul 2013
Aug 2013
Sep 2013
Oct 2013
Nov 2013
Dec 2013
Jan 2014
Feb 2014
Mar 2014
Apr 2014
May 2014
Jun 2014
Jul 2014
Aug 2014
Sep 2014
Oct 2014
Nov 2014
Dec 2014
Jan 2015
Feb 2015
Mar 2015
Apr 2015
May 2015
Jun 2015
Jul 2015
Aug 2015
Sep 2015
Oct 2015
Nov 2015
Dec 2015
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Column 2
VEET average market spot price
$ 19.85
$ 18.13
$ 17.19
$ 17.60
$ 17.10
$ 14.80
$ 13.88
$ 14.84
$ 13.65
$ 12.64
$ 15.25
$ 16.59
$ 16.21
$ 18.38
$ 19.70
$ 19.13
$ 18.41
$ 19.29
$ 17.40
$ 15.76
$ 14.48
$ 14.37
$ 17.25
$ 19.96
$ 18.36
$ 18.42
$ 18.76
$ 18.73
$ 18.90
$ 19.24
$ 20.69
$ 26.10
$ 32.73
$ 32.97
$ 27.20
$ 27.25
3
4
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Column 1
Month
Jan 2016
Feb 2016
Mar 2016
Apr 2016
May 2016
Jun 2016
Jul 2016
Aug 2016
Sep 2016
Oct 2016
Nov 2016
Dec 2016
Victoria Government Gazette
Column 2
VEET average market spot price
$ 24.76
$ 23.07
$ 22.51
$ 20.87
$ 18.84
$ 17.78
$ 16.62
$ 14.61
$ 14.37
$ 16.13
$ 15.80
$ 15.40
Dated 21 February 2017
Responsible Minister:
HON LILY D’AMBROSIO MP
Minister for Energy, Environment and Climate Change
MONICA BIRD
Acting Clerk of the Executive Council
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State of Victoria 2017
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